Price negotiation for customized IT products: A customer negotiated pricing perspective
Date Issued
2008
Date
2008
Author(s)
Ding-Ruei, Jhuo
Abstract
The decision of price which involves in the domain of economics and psychology is a complex process. It will erode the revenue when we price too low while pricing too high may make the transaction unacceptable to customers. Price plays an important role in the transaction and there are complicated considerations behind the decision of price.T-related customized services have the features of customization and involvements of mutual collaboration which complicate pricing are different from mass-production products that are according to general requirements of market without thinking about individual needs (e.g., shampoo ). Due to the different requirements of each customer, it is difficult to establish a standard to decide the price.ast researches regarding this issue focused on the cost perspective aiming how to charge customers without considering pricing in an angle of whole transaction. Therefore, this research used another perspective of consumer negotiated pricing to treat this subject. The purpose of this research is to understand the factors except cost to influence the decision of price of IT-related customized service, and hope to offer a holistic view of point to evaluate the transaction. In addition, by constructing the negotiated pricing model of IT-related customized service, this research also wants to offer a reference for managers to efficiently administer this kind of issue.his research attempts to know if factors of pre-transaction and collaboration conditions have influence on pricing, and these considerations are essential to the whole transaction. We used questionnaires to survey Taiwan’s IT-related customized services providers and customers who ever engaged this kind of service with related providers. The result supports that whether pre-transaction, degree of collaboration all have influences on price. This result implies that there are some other factors which will also affect price as well as cost consideration. Therefore, it is incomplete for managers to consider single factor but a whole picture in pricing.his research proposes a view of transaction to see how pricing is preceded in IT-related customized service. It makes whether supplier or customer understand related factors during the transaction in this kind of service. In managerial perspective, the research offers managers a reference of perception difference between seller and buyer. It can make manager avoid the unfavorable factors toward him during transaction. In strategy consideration, since we know what factors influencing the negotiated pricing orientation, we can intentionally mislead the other party in order to gain a favorable position toward us.
Subjects
pricing
collaboration
transaction orientation
customized service
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